The latest on California politics and government

February 28, 2014

OAKLAND - Gov. Jerry Brown on Friday defended his plan to use carbon-reduction funds for years ahead to prop up California's high-speed rail project, saying uncertainty about the project's long-term financing is "one of the greatest questions of the critics" and that fees paid by carbon producers are an appropriate source of funds.

"I think that cap-and-trade is very appropriate because high-speed rail reduces greenhouse gases," the Democratic governor told reporters in an elections office in Oakland, where he came to file for re-election.

Brown in January proposed using $250 million in cap-and-trade revenue - the money polluters pay to offset carbon emissions -- to help finance the $68 billion rail project, and in a budget trailer bill he proposed dedicating one-third of all greenhouse gas reduction fund revenue to the project in future years. In addition, he proposed that $400 million loaned from the cap-and-trade program to the general fund last year be used for high-speed rail when that money eventually is repaid.

The cap-and-trade proposal is one of the most controversial elements of Brown's budget plan this year. Environmentalists have said money should be used for other projects, while the nonpartisan Legislative Analyst's Office has raised legal questions about the funding shift.

Cap-and-trade revenue is intended to reduce greenhouse gas emissions. In a review of Brown's proposal, the LAO said the first phase of the rail project will not be operational until after 2020, and "the construction of the project would actually generate GHG emissions of 30,000 metric tons over the next several years."

Though acknowledging the California High-Speed Rail Authority's plan to offset emissions by planting thousands of trees in the Central Valley, the LAO said the administration's "emission estimates for construction do not include emissions associated with the production of construction materials, which suggests that the amount of emissions requiring mitigation could be much higher than currently planned."

The rail project, a priority of Brown's administration, has been beset by a fall-off in public approval and uncertainty about long-term financing. In addition, legal challenges have left state bond funding in doubt.

Brown said Friday that his "main focus" is on litigation and that he is "hopeful we'll get that resolved quickly."